GlobalFoundries is reportedly considering a merger with Taiwan-based United Microelectronics Corp. (UMC) to enhance manufacturing capabilities for older-generation semiconductors.

The deal, valued at around US$37 billion combined, faces challenges as GlobalFoundries may need to borrow or dilute stock to finance the transaction, lacking sufficient cash reserves for a direct purchase.

Geopolitical factors could also complicate the merger, with approval from Chinese regulators likely required.

Taiwan’s government may resist a deal that places control of both companies under GlobalFoundries.

Both companies have not commented publicly on the merger, with UMC’s chief financial officer declining to address the speculation.

Recent GlobalFoundries developments